Hanwha Solutions Restructures Business... "Expanding Solar Investment to Enhance Shareholder Value"

Galleria and Advanced Materials Split... Reduced to 3 Divisions Focused on Eco-Friendly Energy and Materials

[Asia Economy Reporter Donghoon Jeong] Hanwha Solutions is undertaking a business restructuring to strengthen its solar energy business. The company aims to simplify its business structure centered on the energy sector and maximize corporate value by investing in the rapidly growing eco-friendly energy business through large-scale fundraising via asset securitization.

On the 23rd, Hanwha Solutions held an extraordinary board meeting and resolved to spin off the Galleria division through a physical split and to spin off part of the Advanced Materials division (automotive lightweight materials and EVA sheets) through a corporate split. It also added that it plans to attract investment by selling part of the shares of the newly spun-off company (tentatively named Hanwha Advanced Materials).

Restructuring Business Around Energy... ‘Selection and Concentration’ Strategy

With this split, Hanwha Solutions will reduce its existing five business divisions to three: Q CELLS (solar energy), Chemicals (basic materials), and Insight (Korean solar development projects, etc.), restructuring its business around energy and materials.

The Galleria division will establish a swift decision-making structure following the physical split early next year, aiming to strengthen competitiveness by expanding investments in premium retail and new businesses. Thanks to a significant increase in demand for luxury goods, home appliances, and furniture, the Galleria division recorded sales of 514.7 billion KRW last year, up 13.7% from the previous year, and operating profit increased about tenfold to 28.9 billion KRW, securing a foundation for autonomous management.

Kim Eun-su, head of the Galleria division, said, “We plan to build a system to quickly respond to the recent rapid changes in the external business environment,” adding, “While continuously strengthening the premium strategy in the existing department store business, we will lay the foundation for sustainable future growth through diversification of retail business and development of new premium content.”

Through this physical split, Hanwha Solutions will divide existing shares at a ratio of approximately 9 (continuing Hanwha Solutions) to 1 (newly established Hanwha Galleria). Hanwha Galleria will be newly listed in March next year, and to facilitate smooth stock trading, the par value per share will be split from 5,000 KRW to 500 KRW.

Accordingly, shareholders holding 10 shares of existing Hanwha Solutions will receive 9 shares of continuing Hanwha Solutions (par value 5,000 KRW) and 10 shares of newly established Hanwha Galleria (par value 500 KRW). Fractional shares less than one share will be compensated in cash based on the closing price on the first day of the new listing.

Large-scale Investment Attraction After Corporate Split... Focused Investment in High-growth Solar Energy

The business spun off from the Advanced Materials division accounted for about 5% of assets and about 4% of operating profit as of the end of 2021 within Hanwha Solutions. The company plans to attract investment by selling part of the shares of the newly spun-off company.

The funds secured from the share sale will be invested in expanding U.S. solar manufacturing facilities, which are expected to become more profitable following the passage of the Inflation Reduction Act (IRA). If the split plan is approved at the extraordinary shareholders’ meeting at the end of October, the newly established Hanwha Advanced Materials will launch in December this year.

Kim In-hwan, head of the Advanced Materials division, said, “We will strengthen the lightweight composite materials business to improve vehicle fuel efficiency amid increasing demand for eco-friendly vehicles and attract investment to build an EVA sheet factory in the U.S., an essential material for maintaining solar cell performance.”

Hanwha Solutions plans to absorb the hydrogen tank business, which is expected to experience high growth, into the Chemicals division to maximize synergy with eco-friendly energy businesses such as solar and wind power.

Stock Tender Offer to Protect Shareholders’ Rights

Hanwha Solutions will introduce various measures to protect minority shareholders’ rights and strengthen communication during this business restructuring process.

First, it plans to spend about 70 billion KRW to conduct a stock tender offer related to the Advanced Materials corporate split. This is a proactive measure to protect shareholder rights ahead of the financial authorities’ planned legislation of the ‘stock purchase claim right system’ during corporate splits.

Shareholders wishing to sell their shares can apply for sale through NH Investment & Securities from September 26 to October 17. Common shares can be sold at the closing price of 51,000 KRW on the 22nd, and preferred shares can be sold at 47,669 KRW, the calculated price under the Capital Markets Act. The tender offer price was set at the higher of the closing price on the day before the corporate split announcement (the 22nd) or the price calculated under the Capital Markets Act.

Hanwha Solutions also plans to conduct a 40 billion KRW paid-in capital increase for preferred shares to ensure that preferred shareholders of Galleria can trade their shares smoothly when the Galleria division is newly listed in March next year. This aims to meet the preferred stock listing requirement (market capitalization of at least 5 billion KRW) and eliminate the possibility of Hanwha Galleria preferred shares remaining unlisted, thereby protecting shareholders.

To enhance communication with shareholders regarding the company split, Hanwha Solutions held an online investor briefing session via its website from 5 p.m. on the 23rd. After the briefing, it plans to continue communication by accepting additional shareholder questions via email.

Shin Yong-in, Vice President and CFO of Hanwha Solutions, stated, “At the time when the solar industry is beginning full-scale growth centered on the U.S. and Europe, we will simplify our business structure and secure investment funds to grow into a global top-tier energy company and maximize shareholder value.”